by Toluwani Folorunso

In Nigeria’s fast-paced business environment, many transactions still begin and end with a handshake. Entrepreneurs often prefer verbal promises which are quick, informal, and grounded in trust. While this practice reflects our business culture, it carries significant legal and financial risks. The truth is simple: handshake deals may feel convenient today, but they can cost far more tomorrow.

Are Verbal Agreements Enforceable in Nigeria?

Under Nigerian contract law, a verbal agreement can be binding if it contains the essential elements of a valid contract:

• an offer and acceptance,
• consideration,
• intention to create legal relations, and
• capacity of the parties.

However, proving a verbal contract in court is notoriously difficult. Without written terms, disputes often reduce to conflicting oral testimony, with little objective evidence to support either side.

Moreover, certain transactions must be in writing by law to be valid. For instance, contracts for the sale of land, dispositions of interests in land, share transfers, and some financial instruments. Attempting to enforce a handshake deal in such cases renders the transaction void or unenforceable.

The Risks of Relying on Handshake Deals

1. Unclear Terms: Parties may later disagree on pricing, delivery timelines, or scope
of work.

2. Lack of Evidence: Courts require credible evidence; oral agreements are harder to
substantiate than written contracts.

3. Changing Circumstances: Verbal promises rarely anticipate inflation, regulatory
changes, or unforeseen delays.

4. Weak Enforcement: Even where enforceable, unclear oral terms complicate judicial
or arbitral enforcement.

5. Damaged Relationships: Disputes over “what was said” often end business
partnerships permanently.

The Real Cost of Informality

What appears cost-saving at first often proves expensive in the long run. Businesses
relying on handshake deals face:

• Increased legal expenses from prolonged disputes;
• Financial losses due to unfulfilled promises or underpayment;
• Reputational harm, as informal practices may deter investors and corporate
partners;
• Missed opportunities, since serious stakeholders prefer businesses that document
their transactions.

Best Practices for Businesses

To minimize risks and strengthen enforceability, organizations should:

1. Reduce agreements to writing: Even a simple memorandum of understanding
(MOU) provides clarity.
2. Define obligations clearly: Specify duties, payment terms, timelines, and
remedies for breach.
3. Use modern tools: E-signatures and digital contracts provide convenience
without sacrificing enforceability.
4. Engage legal counsel: A short consultation at the negotiation stage is far less
costly than litigation later.
5. Preserve records of communication: Emails, WhatsApp chats, and meeting
notes can serve as supplementary evidence if disputes arise.

Conclusion

Trust is vital in business, but trust alone is not a substitute for proper documentation. In
Nigeria’s evolving commercial landscape, handshake deals expose parties to
unnecessary risk. Written contracts provide the clarity, security, and enforceability that
modern businesses need. The safest approach remains: trust but put it in writing.